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NEWS ON 7

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INSTEAD OF STARTING A NEW BUSINESS, WHY NOT BUY AN EXISTING ONE?
Facing a tidal wave of retirements, many Canadian small businesses risk vanishing unless a new generation of
entrepreneurs steps up to carry their legacy forward.
Research by the Canadian Federation of Independent Business (CFIB) found that 76 per cent of small-business
owners are planning to exit their businesses over the next decade, marking a potential transfer of over $2-trillion
in business assets. If these firms are not sold, they risk going out of business, resulting in billions of dollars of
economic losses and the destruction of countless jobs.
While there are thousands of organizations across the country focused on helping people launch new businesses, there is
insufficient support for entrepreneurs looking to acquire existing businesses. Entrepreneurship Through Acquisition (ETA), a
strategy where individuals or groups acquire and manage existing companies rather than starting new ventures from
scratch, is an underappreciated path.
ETA not only saves businesses from potential closings, it stimulates economic growth by revitalizing existing businesses,
injecting fresh ideas and capital. This approach not only accelerates wealth creation for individuals but also invigorates local
economies through job creation and improved business practices.
Younger entrepreneurs, with their fresh ideas and tech-savviness, are especially well positioned to modernize existing
businesses. Therefore, ETA is about more than just ensuring existing small businesses stay open; it’s also about catalyzing the
Canadian economy through expanding existing firms. A study from Relay Investments, an American firm that invests in
entrepreneurs who acquire firms, found that 88 per cent of firms purchased through ETA create jobs after being acquired,
with 46 per cent of these firms more than doubling their head count.
As Canada has 100,000 fewer entrepreneurs than two decades ago, we desperately need more people choosing to be
entrepreneurs. Increasing support for ETA will increase the number of people pursuing entrepreneurship in Canada, which
will increase Canadian labour productivity and overall economic growth.
Acquiring an established business means stepping into a venture with an existing customer base, proven revenue streams
and existing operational systems. This reduces the uncertainties and challenges typically associated with new startups,
where the failure rate is notably high. The work here at the Chamber is to support young entrepreneurs in developing
entrepreneurial skills, I see firsthand how many young people desire to be entrepreneurs but don’t necessarily want to start
something from scratch. Promoting awareness of other organizations that will support and guide our new generation of
business owners is truly needed. This information is based on an article from the Globe & Mail.

Shari

Shari Pearce, President of the Madoc & District Chamber of Commerce
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